US–China trade war and the WTO dispute settlement mechanism

• Pages: 125-135
• DOI: https://doi.org/10.1108/JITLP-02-2019-0011
• Published date: 26 June 2019
• Date: 26 June 2019
• Author: Tolulope Anthony Adekola
• Subject Matter: Strategy

US–China trade war and the WTO

dispute settlement mechanism

Tolulope Anthony Adekola

School of Law, City University of Hong Kong, Kowloon, Hong Kong

Abstract

Purpose –The paper is prompted by the US–Chinatrade war and its implications for the sustenanceof the

multilateral trading system. The two rivals resorted to “self-help”without recourse to the World Trade

Organization (WTO) disputesettlement system, f‌louting the WTO as an adjudicator in trade disputes. This

paper aims to analyze the drawbacksin the settlement system and examines the urgent need for a retroactive

remedy.

Design/methodology/approach –This paper adopts desk-review and jurisprudential analysis of the

relevant rulings of the WTO dispute settlement body. Using desk-review, primary sources such as the

relevant domestic legislations invoked by the USA and China to trigger the trade war were discussed and

criticallyanalyzed.

Findings –This paper f‌inds that the unilateraland protectionist actions that characterize the trade warcan

be linked to the loss of conf‌idence in WTO remediesto redress members’retroactive economic losses. This

f‌inding is useful in arguing for the incorporation of a retrospective monetary remedy to forestall the

reoccurrenceof a similar trade war and save the WTO from being dysfunctional.

Originality/value –Although, whetherthere should be retroactive remedies in thesettlement system has

been long debated, this paper makes a signif‌icant contribution by highlighting why the drawbacks in the

settlement system have become so prominent in the context of this trade war. This paper strengthens the

urgentneed for WTO dispute settlementreform to prevent a reoccurrenceof another globaldistortion of trade.

Keywords Unilateralism, International trade, US-China trade war, WTO dispute settlement reforms

Paper type Research paper

Introduction

The need to normalize international trade through a regulated multilateral trading system

was brought to the fore after the Second WorldWar when it was recognized that the beggar-

thy-neighbour tariff policiesof the 1930s had formed part of the remote causes of the brutal

war (Crowley, 2003, p. 42). The WTO, which succeededthe general agreements on tariff and

trade (GATT) in 1995, was formed to regulate international trade and prevent an outbreak

of another trade war.

The WTO was established to primarily serve three key purposes. The f‌irst was to

provide a regulated stage for members to consult and negotiate their trade agenda[1]. The

second was to ensure that no member nation is discriminated against in terms of trade[

1

].

The third was the provision of a functional adjudicatory system to allow for settlement of

trade disputes to forestalltrade wars[

1

].

In a bid to strengthen the multilateral trading system, the dispute settlement

understanding (DSU) in its Article 23 stresses the need for parties to resort to the

multilateral dispute settlement mechanism within the WTO in the event of any perceived

impairment or nullif‌ication of their rights by another WTO member. The essence of this

The authors would like to acknowledge the contributions of Assistant Prof. Xing Lijuan to the initial

draft of this paper and the supervision of Associate Prof. Wenwei Guan.

US–China

trade war and

the WTO

125

Received7 February 2019

Revised1 April 2019

2 May2019

14May 2019

Accepted15 May 2019

Journalof International Trade

Lawand Policy

Vol.18 No. 3, 2019

pp. 125-135

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-02-2019-0011

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